A new study lays bare a stark transatlantic gap in termination expenses: dismissing an employee in Germany costs the equivalent of 31 months of salary on average, according to research by Oliver Coste. In Switzerland, the same process runs a mere 2.5 months’ pay. The reason, analysts say, lies in Switzerland’s at-will employment system versus Germany’s requirement to justify every layoff on social grounds.
The numbers come as the German government, employers and unions met Wednesday at the chancellery to wrestle over potential reforms. The Kündigungsreport 2026, a separate industry report, adds a grim detail: nearly half of all dismissed workers walk away without any severance at all. Meanwhile, the share of dismissals justified by artificial intelligence has jumped from one percent to eight percent.
Who enjoys near-total protection
German law makes certain groups practically untouchable. Pregnant employees, severely disabled staff, works council members, trainees, and workers on parental or care leave are all but immune to dismissal. For individuals with disabilities, an employer must obtain approval from the Integrationsamt before sending a pink slip.
From 2026, higher tax-free allowances will take effect: people with a degree of disability (GdB) of 100 can claim up to €2,840, and those with certain additional markers up to €7,400. Severely disabled workers are also entitled to five extra vacation days per year.
Anyone who does receive a termination notice must act fast: the deadline to file a labor court claim is three weeks from receipt of the letter.
Corporate downsizing picks up speed
Despite the legal hurdles, several major companies have announced job cuts as cost pressures mount. ZEISS Group reported first-half 2025/26 revenue of €5.84 billion and EBIT of €955 million, but a three-year savings program in the triple-digit millions is already underway. Its subsidiary Carl Zeiss Meditec indicated that up to 1,000 jobs could be eliminated. In Göttingen, Carl Zeiss CMP GmbH plans to cut 120 positions by 2030.
At Mosca GmbH, a voluntary severance program runs from June 8 to June 30, targeting up to 150 roles. Operational dismissals will not occur until at least July 1, the company said.
Political pressure for reform – with limits
The high cost of layoffs has prompted growing calls for looser rules, particularly for high earners. Economists and parts of the governing coalition have signaled openness. At Wednesday’s summit, topics included overhauls of social insurance, taxes and bureaucracy.
Employers urged swift decisions. Trade unions, however, drew a red line: the eight-hour workday cannot be touched. The next round of talks is set for the coalition committee on July 1.
